4 Jan

Interest rate cut due next week?

Interest rate cut due next week?

A dip in growth in Britain's manufacturing sector could prompt an interest rate as early as next week, it has been predicted.

New data from the Chartered Institute of Purchasing and Supply's (Cips) purchasing managers index indicates a drop to 52.9 in December from November's figure of 54.3.

Meanwhile, new orders dipped to their lowest level in 21 months - suggesting that the manufacturing sector is due to slow down next year, Cips said.

In response the Bank of England could move to cut interest rates soon, with Howard Archer, chief economist at Global Insight, predicting it could happen as early as next week.

He said: "Going forward, we expect the manufacturing sector to lose further momentum as it is buffeted by the credit crunch, slowing domestic demand and elevated oil prices.

"The weaker manufacturing survey keeps open the possibility that the Bank of England could cut interest rates by a further 25 basis points to 5.25 per cent as early as next week."

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